Don’t Be Fooled by Iran’s September Surprise

Iran is bleeding. The U.S. naval blockade is doing what years of sanctions could never achieve—it has done profound damage to the Iranian economy by cutting off its access to $300 million to $500 million a day in hard currency. Don’t be fooled by Iran’s recent “September surprise”—Iraqi militias striking a Saudi oil pipeline, Houthi fighters seizing islands in the Bab el-Mandeb Strait, and missiles and drones threatening Red Sea shipping. These attacks reflect a desperate Iranian regime that is running out of money and time.

Since the U.S. reinstated the oil blockade in mid-July, no Iranian crude cargoes have successfully transited the Strait of Hormuz to China, and as of September 1, Iran had gone roughly seven weeks without shipping meaningful crude exports—the longest such stretch on record. Iranian oil that does get loaded onto tankers is piling up in storage and cannot get out of the Arabian Gulf.

Iranian President Masoud Pezeshkian has spoken openly in recent weeks about oil export losses, gasoline shortages, and the strain sanctions and war have placed on ordinary Iranians—an unprecedented admission from a government that has spent decades insisting its enemies, not its own mismanagement, are to blame for hardship at home. Pezeshkian has warned that Iranians are “on the edge,” even as his government moves to raise fuel prices further. Year-over-year inflation hit about 89 percent in August; food inflation exceeded 127 percent. Families are skipping meat for weeks. They are selling off savings just to keep the lights on. When a sitting Iranian president talks about hunger and suffering, this is not a regime that is “winning.”

Hardliners deny this and are resorting to the old Iranian playbook: escalate through proxies to instigate domestic pressure to force an American president to back down. Iraqi militias launched drones at Saudi Arabia’s East-West pipeline, the route that lets Riyadh move oil to the Red Sea and bypass the Strait of Hormuz. At the same time, Yemen’s Houthi rebels, an Iranian terrorist proxy, seized small islands in the Bab el-Mandeb Strait, tightening their grip on this southern Red Sea chokepoint. They have also fired on Red Sea shipping and threatened oil tankers.